Spanish airlines feel pressure from expansion of fast train

Deputy Prime Minister, Maria Teresa de la Vega, said “We have the largest amount of high-speed rail under construction, with five times more than the next country, Japan, and in just two years we will have the most kilometres of high-speed in operation”.

The government plans to have 10,000 kilometres of high-speed railway track in place by 2020, meaning 90% of Spain's population will live less than 50 kilometres from a bullet train station.

Earlier this month, Spanish flag carrier, Iberia, blamed the opening of the new links to Barcelona and Malaga for a 0.5 ppt fall in its domestic load factor in the first quarter from the same time last year to 69.2%. The decline came even though the airline had cut capacity on its flights within Spain by 13% during the first three months of the year.

Iberia Chairman, Fernando Conte, who has called the competition posed by bullet trains 'tremendous,' said the carrier would push ahead with plans to reduce its capacity on domestic flights by 15% during the rest of 2008.

It plans to reduce capacity on its flights between Madrid and Barcelona by up to 20% by using aircrafts with smaller capacity but maintaining the number of daily flights on the route.

The airline's strategy is to gradually reduce its domestic flights, where it also faces stiff competition from low-cost airlines, and increase its long-haul flights, especially to Latin America.

Other carriers are also struggling to compete with the high-speed trains.

Spanair has reduced the number of its flights between Madrid and Malaga while loss-making low-cost airline, Vueling Airlines SA, cancelled its Summer connection between the two cities.

The high-speed AVE trains can make the 660-kilometre trip between Madrid and Barcelona in about two and a half hours.

Date posted: 27-May-08